Ready-to-drink beverages: a convenient answer to consumer demand for functionality?

Ready-to-drink beverages, or RTDs, are single-use beverages that are packaged ready for immediate consumption upon purchase. The market for RTDs is now broader than ever, ranging from iced coffees and teas, to kefir yoghurt drinks to canned wines and cocktails.

According to ForMarkets, the global RTD market is predicted to reach $17.67 billion by 2025, with a growth rate of 7.2% from 2018-2025. In 2019, an increasing number of beverage brands have jumped on to the RTD-bandwagon with cutting-edge beverage innovations.

Consumer awareness for health and wellness, demand for clean label and functionality are just some of the contributing factors pushing this rapid growth in the RTD category. So, what are the top 5 drivers of success for the ready-to-drink beverage sector?

Functionality

Within the RTD market, it has become evident that whilst using vibrant, creative packaging can help sell the beverage, it is more important is to focus on the innovation of the beverage itself. So far in 2019, this has been particularly centred on the creation of beverage products with a unique function.

According to Frost and Sullivan research, functional drinks represent the fastest growing functional market. Research from Mintel has found that, in the RTD category, consumers mainly seek choices that include antioxidants (47%), promote brain health (40%), are anti-inflammatory (35%) or have probiotics (30%).

It is evident that functional RTDs are appealing to the health-conscious consumer. This year we have seen a variety of new ‘fusion’ beverages that are both ready-to-drink and claim to have health-related functional benefits, such as cannabis-infused iced teas and collagen waters.

In particular, the past year has seen a boom for probiotic beverages. Global Market Insights Inc. claims that by 2023, the global market for probiotic ingredients is expected to reach $64 billion. Products released within this category range from probiotic dairy drinks to probiotic juices. RTD probiotic beverages allow health conscious consumers a quick and easy way to potentially improve their gut health.

Energy drinks are a common example of drinks with functionality and have always been a strong driver of the RTD market. However, as consumers are becoming more concerned about what they are putting into their bodies, the category is now beginning to redefine itself.

Clean, functional beverages have an increasingly significant place in the RTD category and we are seeing, and will continue to see, big brands and new brands alike hopping onto this trend in the near future.

Convenience

Time-poor, on-the-go consumers are increasingly looking for products to fit their active lifestyles. As such, convenience trends are fuelling demand for ready-to-drink beverages.

Recent growth in the RTD coffee market is largely down to this consumer demand for convenient beverages that not only fit into but also fuel their busy lives.. The Global RTD Coffee Market is forecasted to reach $12.61 billion by 2024, witnessing growth of 4.5% during the forecast period (2019 – 2024), according to Mordor Intelligence.

We have also seen an increase in brands providing healthy and convenient solutions for consumers who may even be too busy to prepare snacks or meals, by releasing RTD products that can be consumed either as a ‘snack’ or meal replacement.

Products such as RTD smoothies are a simple way for shoppers to ensure they are getting key nutrients from fruit. UK brand Earlybirds took this further by creating a ‘snacking beverage’ range; providing a high-fibre, plant-based drink for time-poor, health-conscious consumers.

We are also seeing an increasing number of beverage products that can be consumed as a meal replacement. For instance, the global breakfast drinks market accounted for $57.17 billion in 2018, and is expected to reach around $83.83 billion by 2026, at a growth rate of around 4.9% between 2019 and 2026, according to a report published by Zion Market Research.

RTD alcoholic beverages

Ready-to-drink alcoholic beverages have been a significant player within the category recently, with the global alcoholic RTD and high strength premixes market estimated to grow at a rate of 3.32% from 2019-2027.

Although it may not appear so at first, the growth of this category coincides with consumer demands for healthier choice. Consumers are making active decisions to reduce the amount of alcohol they are consuming, for instance, alcohol consumption fell by 1.5% around the world last year, according to IWSR. Providing options for smaller, more convenient alcoholic beverage products, containing less alcohol, means consumers can consciously cut down on the amount of alcohol they consume.

Ultimately, RTD alcoholic beverages allow consumers with choice, both in terms of the wide variety of new innovative products and the option to choose healthier options such as lower alcohol, lower calories and smaller volumes.

Premiumisation

The RTD beverage category is growing rapidly, and with this growth comes further competition for beverage companies. Therefore, the need for innovation and uniqueness is greater than ever.

With sustainability heavily impacting beverage brands currently, it comes as no surprise that there is an inclination towards cans or glass bottles for RTD packaging design, which arguably give a premium look.

Craft beers brands and sparkling soda alike are hopping onto this trend of premium packaging trend. Belgian start-up brand, Yugen, collaborated with Ball Corporation earlier this year to create a new range of kombucha packaged in printed cans.

Millennials

Millennial-aged consumers are a primary target market for this category and are driving both innovation and success within it. The health-conscious millennial consumer is continuing to redefine consumer markets, and RTD beverages provide them with fresh, new, exciting brand stories.

In a recent study, it was found that 57% of consumers aged 25 to 35 demonstrated engagement with all functional beverage category segments. They are a generation of busy individuals ultimately looking to find simple, convenient ways to conform to a healthy lifestyle.

Attractive packaging designs on RTD beverages are favourable for beverage brands marketing products to younger consumers. The eye-catching designs on social media are key to influencing millennial consumer behaviour. Global brands marketing director Jen Draper, claims that 80% of consumers are more likely to purchase an item based on friends’ suggestions, with social media being one of the easiest ways to do this.

These top five factors contributing to the growth of RTD beverages span across multiple categories, from alcohol premixes to dairy/dairy alternatives, soda, coffee, tea, sparkling energy drinks and more.

It is no surprise, therefore, that a plethora of beverage brands have hopped onto this booming trend, which not only caters to modern-day consumers’ concern with health and wellness, but also with their need for convenience within busy fast-paced lives.

Your privacyWe use small files known as ‘cookies’ to enhance your experience of the FoodBev website and analyse site-traffic. Read about how we use cookies or how you may control them in our updated privacy policy and cookie policy. If you continue to use this site, you consent to our use of cookies. Click the ‘OKAY‘ button at the top right of this panel to accept or click here for more information.